Enshittification and the Search-Ad Tax
Definition
Enshittification (Cory Doctorow’s term) is the predictable decay of a platform that first wins users by serving them, then extracts from them once they cannot easily leave. Seth Godin’s “the Amazon tax” is the concrete case: Amazon earns close to a billion dollars of profit per week from search ads — enough to hand every employee a $35,000 bonus with change left over — by selling merchants the right to distort its own search results.
It is not a tax. Taxes buy public goods. This buys nothing.
Core Ideas
Zero-sum ads are structurally different from demand-creating ads
A traditional ad increases demand: you see something, desire is sparked, category sales go up. A marketplace search ad does not. The buyer is already on the site, already searching, already going to buy an air fryer. Total category sales stay flat, so merchants are bidding for share of a static pie.
One cited study goes further: an ecommerce site with search ads sells fewer items than the same site without them.
The ads make the search worse — by design
If you search for an air fryer, Amazon already knows which model is best-reviewed, least-returned, and best-priced. The only function of the ad is either to push you to a different model, or — for the maker of the best one — to keep you on the path you were already on. Godin’s sharpest example: his publisher’s highest-yielding ad is on the query “Seth Godin The Knot”, about $1 per click to advertise the book the searcher came to buy.
The defensive-bidding trap
Once ads exist, the maker of the genuinely best product must bid too, purely to protect sales it had already earned. Merchants keep buying not because they are naive but because the system leaves few options. (Folklore says ad spend lifts organic ranking afterwards; there is little data behind it.)
Who actually pays, and the two perverse incentives
Sellers cannot absorb $50bn+ a year of this indefinitely — the customer pays, through higher prices or through products that were never developed. Two second-order effects follow:
- Producers de-invest in quality. If click budget beats brand reputation, the winning move is a cheaper, shoddier product with a bigger ad budget.
- The platform is incentivised to degrade organic results. Worse free search means more paid search. Google walked this path first.
The reversal of the founding claim
For decades Amazon genuinely created consumer value — lower prices on nearly everything, and distribution for merchants who had none. “Customer-centric” was true. Godin’s conclusion is that the claim no longer holds: the ad system is legal, and it is clear who it is for. “Amazon is stealing from the customers they said they were here to serve.”
Relationships
- Growth Marketing — the channel-buying discipline operating inside this system
- SaaS Distribution — the same dependency problem: renting reach from a platform that can reprice it
- Economic Thinking — incentives, opportunity cost, and rent extraction as decision models
- Measurement Dysfunction — a metric (clicks) displacing the goal (the best product winning)
- System Thinking — a feedback loop where degrading the free tier raises paid demand
- Growth and Distribution for SaaS — parent topic
References
- The Amazon tax — Seth Godin, 2026-08-18 (citing Cory Doctorow’s enshittification essay)